Contracts/Projects Executed

Before I list my own projects let me mention what was done with the N8.4billion of the intervention fund that had been spent before I came in. N6.4billion was spent on the safe tower project and a further N2billion was spent on laying off staff at FAAN by my predecessor in office.
When I got in I was a little bit concerned because of the huge amount of money that had been spent, particularly on the safe tower project. It was clear to me that the contractor did not appear to have delivered the goods considering the amount of money he had already been paid (N6.4billion). My first concern was that with all this money that had been spent, we had to ensure that something was done. I immediately directed my staff to scrutinize the execution of the contract and to push the contractor, AVSATEL, Vienna and Abuja to do what it had been paid to do. This contract which had been signed on June 2006 was meant for the refurbishment of four airport towers, namely, Abuja, Lagos, Port Harcourt and Kano. It is interesting to note that a significant amount of equipment was brought in by the company only after we pushed them to do so. We did this successfully after compelling the contractor to honour his obligations. We did all that we could before we left to pressurize the company to fast-track the importation of the equipment and the completion of the contract. By the time we left at least two of the four control towers that had been previously paid for were fully equipped, completed, installed and commissioned. Whilst fast-tracking the project I still had some deep concerns about some aspects of the contract and its funding. This informed my setting up a technical committee headed by Captain Shehu Iyal (Senior Special Assistant to Mr. President on Aviation) to look into the details of the contract, its funding and the execution of the project itself. The committee had very clear terms of reference. A number of controversial issues were raised and disturbing revelations were made in the final report of that committee (doc. attached). Despite this the committee clearly recommended that the project should be continued because so much money had been spent on it already (N6.4billion) and this was a vital project for Nigeria’s aviation sector. I then forwarded the committee report to President Olusegun Obasanjo, who took further action by directing that it should be sent to the National Security Adviser.
When I came in and the N11billion was released to me plus the N1,633,000,000 (Rivers State Government soft loan) the following graphically reflects how I administered and applied the money. Let me emphasize the fact that every contract that was awarded by me was listed as a priority project and costed before I went to the Ministry of Aviation.
These are the contracts that I awarded:
Asphalt Concrete Resurfacing of Port Harcourt International Airport Runway 03/21. This contract was won by Julius Berger, I took the memo to the Federal Executive Council (FEC), followed by ratification (doc. attached), the contract was awarded at N3billion. I released 50% of the money (N1.5billion) for the contract to Julius Berger (doc. attached) and the contract has since been completed. The balance of N1.5billion for this contract was left in the intervention fund account. Let me again make it clear that the funding of the first half of this particular contract (the initial payment of N1.5billion) actually came from the soft loan provided by the Rivers State Government.

On the issue of the N2billion soft loan, let me also say this: the money that had been spent out of that N2billion before I came into office can be accounted for by my predecessor. I only got N1,633,000,000 out of that money. The balance of N350million was applied by my predecessor before I came in. I applied N1.5billion of it and I left approximately N133million in the account (doc. attached).
The second contract was the Extension and Asphalt Resurfacing of Runway 18L/36R of Muritala Muhammed International Airport, Ikeja (the Domestic Runway). We awarded the contract at N3.5billion after approval by the Federal Executive Council was granted. After the Council approval (doc. attached), FAAN wrote to us and made an application for 50% payment immediately so as to ensure that the contract was finished quickly because the raining season was coming amongst other things. We approved that application and consequently we paid 50% of the cost (approximately N1.8billion) to Messrs. P.W. Nigeria Limited. This contract has also almost been completed (75%) and the balance of the price (N1.7billion) was also left in the intervention fund account for payment to the contractor upon completion of the contract.
The third contract that I awarded was the Cargo Apron Expansion at Muritala Muhammed International Airport won by Messrs FIAT International Limited at approximately N850million. This contract went to Council, it was approved and all due process was followed (doc. attached). Again FAAN wrote to us asking for 50% upfront payment, this amounted to N426,278,697.34 on the grounds that the project should begin before raining season started so that it could be concluded quickly. The request was granted and the 50% was paid to the company by FAAN. The contract is still on-going and the contractor is still on site. The balance of the money (N426million) was left in the intervention fund account and it should be released to the contractor upon the completion of the contract.
The fourth expenditure was not a contract but a refund for contracts that FAAN already executed and paid for with their own money before I came into the Ministry and in respect of the ICAO Audit 2006. ICAO is a specialized agency of the United Nations which was created to promote safety and orderly development of the International Civil Aviation throughout the world. It sets standards and regulations necessary for aviation safety, security, efficiency and protection of the aviation environment throughout the world.
The ICAO Safety Oversight Audit 2006 was one of the main reasons that the Aviation Intervention Fund was set up (doc. attached). The intervention fund was approved by Mr. President for (amongst other things) the funding associated with the preparations for ICAO and to enable FAAN carry out all the required critical projects associated with and in preparation for the audit. Unfortunately, the intervention fund was not released on time for the audit. As a result of the delay in releasing the expected Intervention Fund, FAAN under the supervision of my predecessor in office, Professor Babalola Borishade, decided to utilize its own funds which were meant for other projects, staff welfare and pensions for ICAO critical projects. As a consequence of this initiative taken by FAAN and as a consequence of their sacrifice, Nigeria scored 90% in the ICAO audit. This was very encouraging and was a great success and morale booster for the Aviation sector in Nigeria and the nation as a whole. According to FAAN, the projects executed totalled N1,315,526,526.74 (doc. attached) out of which the sum of N772,725,096.12 was paid by FAAN leaving a balance of N543,801,430.62 to be paid to the contractors (doc. attached). It is pertinent to note that all the contracts (ICAO critical projects) were all awarded and executed by FAAN before I came in as the Minister of Aviation and before the ICAO audit took place. Consequently these contracts would have got the relevant approvals from the Board of Directors of FAAN and the Ministerial Tenders Board.

On the 4th of January 2007, FAAN wrote to me requesting for a refund of N772,225,096.12 which was paid to the contractors and a balance of N543,801,430.62 which was yet to be paid to the contractors who executed the ICAO critical projects and also a sum of N144,000,000.00 for the outstanding payments to Julius Berger for the maintenance of the NAIA Abuja (doc. attached) from the intervention fund.

A follow-up request was made on the 17th of April, 2007. The Managing Director of FAAN and his Director of Finance came to the Implementation Committee and told us clearly and categorically that if this money was not refunded immediately the whole parastatal and aviation sector will come to a standstill because it could no longer pay staff salaries (which almost resulted in a strike), they could no longer maintain their airports, they could no longer execute safety critical projects at FAAN (such as the water improvement of MMA Lagos, replacement of 2.33KV PHCN feeders to the airport etc.) and they could no longer honour their obligations to contractors that were offering critical and daily services to them.

This critical financial problem bedeviling FAAN was compounded by the fact that FAAN’s internally generated revenue was affected drastically by the fact that FAAN was compelled to pay N220,000,000.00 a month to Zenith Bank for a bank loan given to NAMA for it’s safe tower project (that arrangement was made before I came into the Ministry). Consequently FAAN was severely cash strapped. We were told that if this situation was not addressed quickly it would certainly have resulted in the total closure and breakdown of our airports with its attendant consequences. Consequently in order to avoid a disaster and after further consultation with the Aviation Implementation Committee, the amount of N1,315,526.74 was released as a refund to FAAN for the ICAO projects that it had previously funded and executed. A further N144,000,000.00 was also released for previous work done by Julius Berger as they had also openly threatened to stop work at the airport if they were not paid. However in my approval for these refunds, I clearly minuted that “due process and due diligence must be followed” in applying and administering the funds (doc. attached). What this meant was that all the necessary approvals for the original contracts and payment vouchers etc must be proved with all other aspects of due process and due diligence before FAAN itself disbursed the money that it received from the intervention fund as a refund for previously executed contracts. FAAN as the implementing agency and entity that applied for and administered the funds will be in a position to give detailed accounts as to how the funds were disbursed following my directive on due process and due diligence. Wherever or if ever due process or due diligence was not fully applied in the original award or execution of any of these contracts the money was supposed to be held back by FAAN or paid back into the intervention fund account.
The fifth expenditure was spent on the local content aspect of the safe tower project. The contract had been awarded long before we came in to the Ministry to AVSATEL, Vienna and Abuja and approximately N6.4billion had been spent by my predecessor. However there was a local content aspect of N74million which we released specifically for the completion of the control tower in Abuja and in Lagos airports. Captain Ado Sanusi, the Director General of Nigerian Airspace Management Agency (NAMA) and the Chairman Project Implementation, AVM C. Onugha applied to me specifically asking for the release of this money and he told me that this funds were for the physical and structural repairs of the control towers in Abuja and Lagos. The total of the local content was N300million but we released only N74million of the N300million (doc. attached). Releasing N74million ensured the completion of the safe tower project in both Lagos and Abuja airports and they were both operational before we left.
Release of Funds to Various Committees
Presidential Implementation Committee
As a consequence of a letter from the Secretary to the Government of the Federation (SGF), Chief Ufot Ekaette stating clearly that the funding of the Presidential Implementation Committee on the Aviation is the responsibility of the Ministry or government agency (doc. attached), N34,000,000.00 was released to the Presidential Implementation Committee in order to allow it to do its work effectively. This money was released from the intervention fund due to the fact that the committee was charged with the responsibility of assisting the Minister in the implementation of the Paul Dike Report and the application of the Intervention Fund. N34,000,000.00 was released as the budgetary allocation for the operation of the committee. This involves their expenses for logistics, sitting allowances, sub-committees, travelling, meetings, etc. It is important to note that this money, which was released about 11/2 years ago to the Presidential Implementation Committee is still being used by them till today.

The Ministerial Committees
Four Ministerial Committees were set up by me
I. Committee on Ticket Pricing: which was headed by Cpt. Shehu Iyal, (The Special Assistant to the President on Aviation Matters).
This committee was set up to:-
a) determine the airfare charged by foreign airlines
between Nigeria and other countries in relation to the airfare charged on other routes with comparable flights;
b) determine the reasons for price differential, if any;
c) make appropriate recommendations to correct the
unfair ticket pricing.
The sum of N18,962,800.00 was released to the committee as a loan from the Intervention Fund. The money was to be paid back to the Intervention Fund account by NCAA and NAMA (doc. attached).
II. Committee to Investigate FAAN’S Agreement for the Supply, Installation, Management and Joint Holding with MAEVIS Ltd
This committee was headed by Hon. Justice Omolade Falodun (Former Chief Justice of Ondo State). The terms of reference were:
To investigate FAAN’s contract agreement
with MAEVIS.
To investigate the allegation of corrupt
practices in the agreement signed by the
Managing Director of FAAN.
To investigate the allegation that FAAN was
being secretly privatized.
To make appropriate recommendations on the
review of contract agreement.
It is pertinent to note that the Managing Director of FAAN, Mohammed Yusuf was not indicted for corruption but the report showed that the contract agreement was a bad one and needed to be reviewed. N6,550,000.00 was released to the committee as a loan from the intervention fund. The money was to be paid back by FAAN, since it was solely a FAAN project. (doc. attached)
III. Aviation Fuel Monitoring Committee
This committee was headed by Mr. Segun Awolowo (The Special Assistant to President Olusegun Obasanjo on legal matters and due diligence), the terms of reference were:
To look into existing and proposed siting and
workings of the fuel hydrant systems at MMIA.
To look into the aviation fuel pricing and advise
To look into safety standards of delivery within all
the airports.
To look into the constant scarcity of aviation fuel.
The sum of N10,000,000.00 was released to the committee as a loan from the intervention fund. The money was to be paid back by FAAN, NIMET, NCAT and SAHCOL respectively.
The money released to these various ministerial committees was supposed to have come directly from the various parastatals as I had earlier directed but these parastatals were slow in releasing the money so we were forced to loan the money for the committees from the Intervention Fund account to the parastatals so that the work could be quickly concluded.
The assignments given to each of these committees were absolutely critical to the aviation sector and each of them did their work with the utmost diligence and integrity and they all came up with credible and important recommendations. It is a matter of regret that the reports were submitted just before the end of the last administration’s tenure in office. If this had not been the case, their recommendations would have been fully implemented. I would urge the present administration to consider implementing the recommendations of these reports as quickly as possible.